ADNOC, the Abu Dhabi oil giant, has launched a $18.7bn takeover bid for Australian group Santos, with the aim of positioning itself as a global player in liquefied natural gas (LNG). The offer, made through its subsidiary XRG with the support of ADQ and Carlyle, values Santos at $23.6bn (A$36.4bn) including debt—a record for a cash acquisition in the country. The target is Santos' strategic LNG assets in Australia and Papua New Guinea, key regions for meeting Asian demand.

However, the project will have to overcome a series of regulatory hurdles, particularly in Australia, Papua New Guinea, and the United States. Analysts point to the risk of a veto by the Australian regulator (FIRB) due to the sensitive nature of the energy infrastructure owned by Santos. XRG is trying to reassure investors by promising to keep Santos' headquarters in the country, but a possible split of local assets to circumvent the obstacles appears complex.

This deal comes after the failure of a merger with Woodside and a slowdown for Santos, which saw its profits and dividends decline in 2024. Despite doubts about the regulatory outcome, the board of directors supports the offer, provided it goes ahead. And according to analysts, the premium offered by ADNOC makes it unlikely that a competitor capable of rivaling the deal will emerge.